Washington Report for 6-16-14

By Steve Kopperud

House pulls ag approps off floor amid school lunch fight, CFTC funding dispute

House leaders reportedly pulled the agriculture/Food & Drug Administration spending bill off the floor last week because the surprising defeat of House Majority Leader Eric Cantor (R-Va.) in the Virginia Republican primary “distracted” GOP floor managers of the bill. The increasing possibility the White House might prevail on striking language allowing school districts to opt out of federal school lunch standards may have had more to do with the decision.

Floor debate began on the bill, but Cantor’s stunning loss sent the GOP caucus into rounds of meetings, and at one point House Speaker John Boehner (R-Ohio), recessed the House so Republicans could meet to talk with Cantor. 

When debate resumed, amendments offered earlier were dispensed with and a late-week announcement said the bill may be taken up again sometime this summer. Veteran appropriations lobbyists say that’s an indication the bill may be dead as a stand-alone bill and will be rolled into the omnibus spending package.

The White House had threatened to veto the ag/FDA bill in its current form, pointing at the school lunch program waivers, language to allow Women, Infant, Children recipients to buy white potatoes with their federal WIC dollars and underfunding of the Commodity Futures Trading Commission.

The CFTC funding level was controversial when the bill was marked up by full committee. The amount of spending allotted to the commission is $218 million, only $3 million more than the FY2014 level, but a whopping $62 million less than the White House recommended this year.

The school lunch battle pitted school districts and state directors of school nutrition programs against First Lady Michelle Obama and her initiative to reverse childhood obesity. The language in the bill requires the U.S. Department of Agriculture to create a waiver program allowing schools and districts to opt out of federal breakfast and lunch programs if they could demonstrate a net operating loss on school meals for at least six months, retroactive to July 2013.

Pledging to fight the waiver language, Obama contends the new menu requirements – focusing on fruits, vegetables and local foods – are necessary to teach students proper nutrition. Lunch program directors said the new standards are expensive, unrealistic with foods difficult to obtain, students refuse to eat the lunches and food waste rates are rising.

President signs WRRDA

President Obama signed the Water Resources and Reform Act  into law, releasing $12.3 billion in federal dollars to improve U.S. harbors, locks, dams and other waterway/flood control projects. The president said during the White House signing ceremony the new law will allow funding of 34 designated waterway/harbor maintenance projects to move forward.

National crop and farming organizations that rely on the Midwest river/waterways networks praised the action, noting U.S. waterways move 60 percent of ag products to export.  Part of the law federalizes 85 percent of the cost of modernizing the Olmsted lock and dam project on the Ohio River – the other 15 percent paid by the Inland Waterways Trust Fund – and this action frees up about $100 million a year for other waterways projects.

The bill includes modernization of the Harbor Maintenance Trust Fund and the IWTF, while carrying language that dramatically changes the Environmental Protection Agency's spill prevention control and countermeasure rules and their impact on farmers and ranchers. 

House energy/water spending bill blocks EPA WOTUS rule

The draft $34-billion energy/water FY2015 appropriations bill unveiled by the House Appropriations Committee contains language blocking the Environmental Protection Agency from proceeding with its “waters of the U.S.” (WOTUS) rulemaking under the Clean Water Act. 

At a House Transportation & Infrastructure Committee last week, EPA witnesses took bipartisan hits on the rulemaking, with committee chair Rep. Bill Shuster (R-Pa.) calling the proposal a “dramatic expansion of the reach of the federal government.” He said WOTUS is the latest in a series of “brute force” rulemakings begun by the administration. Committee members Rep. Nick Rahall (D-W.Va.) and Rep. Bob Gibbs (R-Ohio) have introduced separate legislation to block the rules.

In agency action, EPA announced it’s extending the public comment period on the controversial rulemaking. The original deadline was July 21, but the agency set the new deadline for Oct.  The comment period deadline is July 7, extended from the June 7 original deadline. The House Agriculture Committee’s subcommittee on conservation, energy and forestry said it will hold a June 19 hearing to review the exemption interpretive rule on ag exemptions. The hearing will be broadcast on the committee’s website and can be accessed at www.agriculture.house.gov.

The draft spending bill language bans the spending of federal dollars by EPA to develop or implement any rulemaking changing CWA jurisdiction of EPA or the U.S. Army Corps of Engineers.  The rule, which is highly controversial among agriculture groups, essentially takes the current regulatory definition – “navigable waters of the U.S.” – and removes the word “navigable,” giving the agency authority to regulate ponds, ditches and other waters on private property, critics say. 

The American Farm Bureau Federation, which leads the anti-WOTUS coalition, said action by EPA to exempt 56 ag practices from the permitting requirements is not enough as the rulemaking would take currently voluntary U.S. Department of Agriculture practices and make them mandatory. 

House approves farm-friendly tax extenders

The full House approved a bill making permanent a tax credit that allows farmers, ranchers and other small businesses to write off up to $500,000 a year on equipment purchases. The action was the second in a series of “tax extender families” approved by the House Ways & Means Committee. The House already approved making permanent the 20 percent research and develop tax credit.

The $500,000 writeoff was allowed in 2012 and 2013 but needed to be reauthorized each year. Not only does the House action dramatically increase the amount – permanent law limits the write off to $25,000 – but the tax breaks will not have to be reauthorized if accepted by the Senate.

The Senate Finance Committee took similar action this spring but extended the tax break for only two years as part of a broad bill extending 55 separate tax breaks, including those for biofuels. The House Ways & Means Committee took the list of 55 and broke it down into several individual bills.

CFTC reauthorization set for House floor this week

The House will take up its version of Commodity Futures Trading Commission reauthorization legislation this week now that the ag/Food & Drug Administration appropriations bill has been indefinitely sidelined. The House Agriculture Committee passed the commission bill with strong bipartisan support.  The Senate has not made public its reauthorization package.

The reauthorization package, last formally passed by Congress in 2008, extends CFTC authority through September 2018.  Given the strong bipartisan support in both the House and Senate to provide protections for “end-users,” those who hedge actual risk using futures markets, the bill would exempt end-users or “non-financial companies” from having to post margins on derivatives trades and would block the commission’s rules on cross-border trading.

House Majority Leader Eric Cantor (R-Va.) said the new rules under Dodd-Frank “unfairly punishes farmers, ranchers and others far from Wall Street that rely on derivatives to hedge against price moves.”  He said the full House will consider amendments that shift or change CFTC regulations.

A controversial section of the bill would require the CFTC to conduct cost-benefit analysis on all proposed rules. Those who defend CFTC actions under Dodd-Frank oppose the commission reauthorization package, contending it will severely limit CFTC oversight, make it tougher to write new rules due to the risk-benefit requirement and make it easier for bad actors to escape commission regulation.

Short-term extension of highway programs likely as funding solution eludes Congress

How to fund the federal Highway Trust Fund – forecast to run out of cash by August – in both the short and long terms is a problem Congress hasn’t overcome. The longer a solution eludes lawmakers, the greater the likelihood this Congress will abandon its plans for a long-term reauthorization of federal highway/commuter programs.

It’s expected the short-term extension will be tacked on to whatever short-term funding solution is agreed to sometime before August.  A short-term extension – 15 months if Congress listens to Sen. Orrin Hatch (R-Utah), ranking member of the Finance Committee – solves two issues:  First, it gets Congress well past the November elections, minimizing to the extent possible, the politics of reauthorization and financing; second, it gives both chambers time to come up with long-term solution to the HTF dilemma. 

The two-year budget agreement signed by President Obama last year doesn’t allow Congress to shift money from general Treasury funds to keep the HTF running as it has in the past. Now, any contribution to the HTF from the Treasury must be paid for by cutting other programs or by scaling back the authority and level of federal contribution to state transportation projects currently enjoyed by the Department of Transportation. Further, a bankrupt HTF means states currently receiving about $45 billion in federal contributions to highway, bridge, urban commuter and related projects would begin to shut down ongoing projects, idling thousands of workers nationally. 

In the Senate, the Environment & Public Works Committee has approved a six-year extension of federal highway programs but is silent on how to pay for them, punting that job to the Senate Finance Committee. Three other committees in the Senate, with jurisdiction over portions of the federal highway programs, continue to work on legislation, but no full package is expected soon. In the House, the Transportation & Infrastructure Committee has just begun looking at highway reauthorization

The Treasury Department says because Americans are using less gas, federal gas tax revenues contributed to the HTF are seriously lagging previous years. While the Senate Finance Committee continues to meet and try to come up with a solution, the only “fix” offered so far is by House Republicans who’ve suggested cutting federal mail delivery from six days a week to five and shifting the savings to the HTF. Democrats, unions and even conservative think tanks think that’s a bad idea. 

Livestock haulers get one-year exemption for HOS rules

The Federal Motor Carrier Safety Administration granted livestock and poultry haulers a one-year exemption from hours-of-service rules requiring 30-minute breaks during the first eight hours of driving. 

Trucking, livestock, poultry and feed groups petitioned FMCSA to grant the exemption based on concerns for animal health and welfare. Most big rigs don’t have independent ventilation systems, relying on air circulating through the trailers as the truck moves. To force drivers to park trucks for up to 30 minutes during periods of very high or extremely low temperatures endangers the animals, the groups said.

A similar 90-day waiver granted in the summer of 2013 showed no safety problems. Drivers moving ag commodities, including livestock with a 150-mile radius of the commodity’s source are already exempt from the HOS rules, and the new action – only the second 30-minute break exemption approved by FMCSA – does not affect that exemption.

Food industry sues Vermont over GM labeling law

As expected, the food industry led by the Grocery Manufacturers Association filed suit to overturn Vemont’s new law requiring foods for human consumption that include ingredients or are the product of biotechnology be labeled. 

The food industry is challenging the law based on First Amendment grounds, contending the law “imposes burdensome new speech requirements” on the food industry and will invoke the Commerce Clause, saying states are prohibited from “regulating nationwide distribution and labeling practices that facilitate interstate commerce.” State lawmakers argue the Vermont law is “lawsuit-proof” because the state has a responsibility to protect the public based on health concerns whether those issues are proven to be real.

Joining GMA are the International Dairy Foods Association, the Snack Food Association and the National Association of Manufactures. The Vermont law takes effect July 2016, and when the state assembly enacted the new labeling law, it created a public/private legal defense fund in anticipation of the food industry legal action.

Corn crop condition slips a bit

The U.S. Department of Agriculture said last week the condition of the U.S. corn crop slipped one point, but is still rated 75 percent good to excellent as of June 8. About 21 percent of the crop is rated fair, down a point as well, and 4 percent is rated poor to very poor. Corn emergence in the 18 states surveyed is at 92 percent, ahead of the 83 percent last year, and a five-year average of 90 percent at this time of year. 

The soybean crop sits at 74 percent good to excellent, 22 percent fair and 4 percent poor to very poor in the 18 major states.  Soybeans are 87 percent planted and 71 percent emerged as of June 8.